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Never tried it personally, but I'm sure 99.99% you won't be able to move the Windows directory with a Junction link.

That is because many of those files, including the kernel itself, are required at bootup, before the file system driver is even loaded.

I also see no mention of Windows 7, so I am unsure of your final result. Are you planning to Windows 7 to use these same folders?? That would be a no go as Windows 7 uses a different format for the user profiles.

This also may play havoc with Programs in Program Files which install differently depending on whether you are installing XP or Windows 7.